Lucky v Ives

JACKMAN J: 1 On 8 December 2023, I made orders granting the plaintiff (Mr Lucky), one of two directors for the second defendant (Chief) leave pursuant to s 237 of the Corporations Act 2001 (Cth) to engage Polczynski Robinson to act for Chief in defence of Federal Court proceedings NSD1063/2021 (the Marketlend Proceeding) and, until further order, to provide instructions to Polczynski Robinson in relation to the conduct of those proceedings: Lucky v Ives [2023] FCA 1571. The first defendant (Mr Ives) now seeks to have the Court set aside some of those orders and make varied orders. 2 It is common ground that some variation is appropriate. Since the grant of leave, Chief have been joined as a respondent to proceedings NSD919/2022 (the Sealoud Proceeding) which raised overlapping issues to the Marketlend Proceeding. Polczynski Robinson is unable to act for Chief in the Sealoud Proceeding due to a conflict. Mr Lucky accepts that: (i) the grant of leave under s 237 should be extended to include the Sealoud Proceeding; (ii) Ms Samantha Peterson of McLachlan Thorpe Partners should act for the company in both proceedings; and (iii) a total of $60,000 should be paid into the trust account of McLachlan Thorpe Partners on account of its anticipated costs. 3 Two matters are in dispute. The first disputed matter is whether the order should be varied to provide Mr Ives rather than Mr Lucky with the leave to provide instructions on behalf of Chief in relation to the proceeding. The Marketlend Proceeding relevantly involves claims against Chief in relation to advice and representations alleged to have been given and made to a client, Marketlend Pty Ltd, in relation to a trade credit insurance placed by Chief. Mr Lucky was Marketlend's insurance broker, and accordingly, it appears to me that only Mr Lucky is in a position to give full and proper instructions about these matters (see the affidavit of Richard Lyne, affirmed 21 August 2024 at paras 22-30). 4 While much of the material may be documentary, it seems to me likely that instructions will be required on matters which are not specifically addressed in the documents. Given the irretrievable breakdown in the relationship between Mr Ives and Mr Lucky (as to which, see Mr Lyons's affidavit at para 31), it is not realistic that Mr Ives will obtain the necessary information from Mr Lucky. Contrary to the first defendant's submissions, I do not regard the evidence as disclosing any unreasonable or inefficient conduct of the Marketlend Proceeding to date on the instructions of the plaintiff. 5 The second disputed matter is whether my order that Mr Ives pay Mr Lucky's costs of and incidental to the hearing on 8 December 2023 should be varied. In general, such an order should not be set aside or varied unless there is shown to have been a material change in circumstances since the original order was made or the discovery of new material which could not reasonably have been put before the Court on the hearing of the original application. The first defendant wishes to be given further time to analyse some recently received material in order to ascertain whether such circumstances can be established or whether there is some other basis on which an application might be brought to vary or set aside that costs order. 6 It seems to me that the first defendant should be given an opportunity to do so, and I am informed by counsel for both parties that 9.30 am on 10 September is a suitable and convenient date for any hearing on that application in relation to costs if it is to be pressed. 7 I note also that Mr Lucky has filed an application under s 461 for an order that Chief be wound up on the just and equitable ground. As the plaintiff submits, if that application is successful, the further conduct of both proceedings will, if leave is given to proceed against Chief, be a matter for the liquidator. 8 I also note that there is a typographical error in my judgement of 8 December 2023, in that the word "reasonable" in the third line of para 12 should read "unreasonable". 9 As to the costs of today, I regard each party as having achieved a measure of success and I regard their legal representatives as having collaborated in a commendable way to the extent that they have been able to do so, notwithstanding the personal difficulties between their respective clients. It seems to me that the appropriate order is that each party bear its own costs of the interlocutory application, except for costs in relation to para 6, which I will determine on 10 September 2024. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jackman.